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Fri, 20 Jan 2012

A Modest Proposal

— SjG @ 9:45 am

Property owners in the United States1 pay property tax. While it makes the Randists froth at the mouth, the reason for this is quite pragmatic: people pay for the infrastructure, defense, and other public services in their communities that support their property. The theory is that a homeowner, for example, has a vested interest in the neighborhood roads being maintained, in having an active fire department, and so on. Similarly, businesses rely on decent roads, an educated workforce, and similar services to do business. We all depend on law enforcement and our defense forces to keep us safe from criminals and the odd invasion.

With the exception of the aforementioned Randists and related lunatics, everyone agrees that the concept of property tax is reasonable. We may all argue about what falls within the realm of appropriate services or infrastructure, and we all feel that our own particular property tax burden is too great, but we agree that there are necessities that we need to help pay for.

Recent events (e.g., the SOPA/PIPA debacle) have brought intellectual property into the spotlight. Corporations owning music, film, and book copyrights are justly upset about the degree of “piracy” taking place on the Internet. While the numbers they present as their financial losses have been widely debunked, there are, in fact, actual losses. So they spend a lot of money lobbying and contributing to political campaigns, and we get fiascos like SOPA/PIPA.

Similarly, we have a patent system that’s wildly out of control. People can and do patent ideas that are …er… patently obvious, or tiny increments over widespread practice. Those patents are then used to suppress whole classes of technologies and programs. Technology companies like Apple, Unisys, and SCO are notoriously litigious, and have often succeeded in using the legal system to suppress competition via patents. Patent trolls or patent clearing houses leverage ridiculous patents to essentially blackmail programmers for ideas that can be found in textbooks. We see small players put out of business on a regular basis, often because they can’t afford to defend against spurious patent claims.

It got me thinking. As a homeowner, I pay annual taxes, commensurate with the value of my house. This money, in effect, pays to protect the value of my property.

The “Content Industry” (RIAA/MPAA) and technology companies claim a great deal of value for their intellectual property, but rely on public money to defend that value. Sure, they pay lawyers, but they use my public courts and (attempt to) pass ever more restrictive laws to protect their assets. A huge amount of government time and public money is wasted on these cases, and we find congress ignoring important issues to focus on extending copyright ad infinitum. The public cost due to lost innovation is staggering2. It’s time for the intellectual property owners to share the burden of that cost. It’s time for a tax on intellectual property.

Intellectual property is hard to appraise for value — thus the owner should be allowed to declare what that value is. The catch is that they will be taxed on that declared value. Like most other property taxes, the value will be appraised on a yearly basis, with limits on the maximum amount of change from one year to the next. If owners decide their property is worth a great deal, then they can pay a great deal to help defend it. If they decide it’s worth nothing, then they cannot claim huge damages when it is not protected and the property is infringed upon.

Intellectual Property Tax. It’s only fair.

1 Most countries have some form of property tax, even if it’s not exactly the same thing as in the US.
2 Patents are, by their nature, designed to foster innovation by giving owners a temporary monopoly. We agree to tweak an otherwise free market to encourage people and companies to invest time into research and development. This system only works if, in fact, the kinds of things that are granted this protection are actual innovations rather than mundane and obvious incremental improvements. As they exist today patents are largely abused, and actually end up preventing new ideas from reaching the market while increasing the cost of products that do.


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